Fonterra Australia announced an AU$165 million investment in capital expenditure at key sites in Victoria and Tasmania in a move to increase capacity and meet unique demand opportunities for dairy.
It is made up of new investment of around AU$130 million to put in 500 million litres of additional capacity, and a further AU$35 million for a range of annual site improvements as part of its regular capital investment plan in Australia.
The new expansion includes:
• AU$125 million expansion at Fonterra Australia’s flagship Stanhope cheese facility in northern Victoria which will double the size of the cheese plant
• AU$12 million investment in Tasmania, which includes expansion to its Wynyard cheese plant and an increase in lactose processing capacity at Spreyton
• A further AU$7 million expansion at the Darnum nutritionals plant in Gippsland as well as the installation of two robotic palletisers in Bayswater in eastern Victoria to improve efficiency
• AU$13.5 million for projects at Cobden and another AU$8.6 million at Dennington in western Victoria
Mr René Dedoncker, Managing Director of Fonterra Australia, said customers want trusted supply options out of Australia, especially for products like cheese, whey and nutritional powders which are in high demand.
“We have a clear strategy that is delivering sustainable returns. To create value, we need to invest to stay ahead of the demand curve. These investments support our aim to secure positive returns back to our farmers on both sides of the Tasman.”
In total the capacity investments will create around 36 jobs, in addition to generating construction work during the development phase.
Mr Dedoncker says more capacity needs more milk and Fonterra Australia is working hard to secure this.
Fonterra Australia’s total milk intake is now two billion litres in Victoria and Tasmania.
Strong relationships with key international partners are crucial to the Australian dairy industry, and a recent visitor to Dairy Australia has provided new insights into an important export market.
Hirofumi Ota is a representative of Japan’s Mitsubishi Corporation and recently completed a four-week internship with Dairy Australia to learn more about the industry and connect with representatives from across the supply chain.
A graduate of Waseda University in Tokyo, Mr Ota spent a significant amount of time in the Victorian dairy regions attending field days, taking part in discussion groups and completing a comparison report on the issues affecting both Australian and Japanese dairy farmers.
“I have enjoyed learning about the different farm systems and meeting farmers.” he said.
“There are many differences and some similarities between the Japanese and Australian dairy industries, so there is a lot we can learn from each other.”
Strong relationships at an industry-wide level help maintain Australia’s position as a preferred supplier, which is important in maximising the return on export sales.
Dairy Australia’s international trade development manager, Peter Myers, coordinated Mr Ota’s internship and said this, and similar Dairy Australia programs, help to improve and maintain access to overseas markets and maximise potential returns to farmers.
“Besides building on existing relationships between Mitsubishi Corporation and the Australian dairy industry, the time that Hiro spent with us gave him greater insights into the Australian dairy supply chain, and improved our understanding of Japanese customer requirements.” he said.
The Mitsubishi Corporation is one of the largest dairy product purchaser in Japan and has a long history of supporting Australian dairy products.
Mr Ota was enthusiastic about the future for the Japan-Australia trade partnership.
“I was very impressed with the way Australian dairy farmers manage their farms and I see great opportunities for Australia and Japan to continue and further develop our excellent trading relationship.” he said.
Mr Ota will complete his Australian trip with a four month placement at Riverina Australia’s Brisbane office. Riverina is an investment of the Mitsubishi Corporation and involved in grain, animal feed and commodity trading.
Photo: Dairy Australia’s International Trade Development Manager Peter Myers with Hirofumi Ota, a representative of Japan’s Mitsubishi Corporation.
The prestigious Australian Grand Dairy Awards has announced its 2018 Champions, revealing the top 18 dairy products in Australia.
Melbourne’s Montefiore Cheese caught the eye (nose and tastebuds) of the judges, with the cheesemaker taking out the 2018 Grand Champion Cheese with its soft and sweet Ovoline.
The 2018 Grand Champion Dairy Product was scooped up by Sydney based Pure Gelato, for its deliciously nutty Salted Pistachio Gelato, which expert judges commended for its superb texture and rich pistachio flavour accentuated by a hint of salt. The awards consumer judging panel agreed, voting this gelato as their pick of the bunch.
For the second year running the Australian public were also invited to vote for their favourite Australian dairy product in the People’s Choice Award. More than 13,179 votes were cast to reveal The Yoghurt Shop Passionately Passionfruit Yoghurt as the 2018 People’s Choice Award winner.
Now in its 19th year, the Australian Grand Dairy Awards recognises and rewards Australia’s top producers and their expert craftsmanship across 18 product categories. In a rigorous judging process, 22 dairy experts sampled hundreds of gold medal winning products to crown their Champions. Flavoursome cheeses, sensational ice creams, luscious milks and velvety yoghurts, among other products, were thoroughly assessed for flavour, aroma, texture, body and appearance.
The coveted list of Champions includes dairy producers big and small. From the herbaceous Monte Diavolo by 3-year-old Section 28 Artisan Cheese out of Adelaide Hills, to Western Star’s much-loved butter churned from a 90-year history in Western Victoria, young and old alike rose to the top of the Champions list.
Amanda Menegazzo, convener of the Australian Grand Dairy Awards said, “The awards are the crème de la crème of dairy and a fantastic opportunity for local farmers and producers to be recognised on a national scale for their talent, hard work and making a positive contribution to the dairy industry.
“The calibre of our 2018 Champion products is testament to our dedicated dairy producers and the one incredible ingredient all these products have in common – Australian milk. Keep your eyes peeled for our blue and gold Champion and Grand Champion medal on packaging and experience Australia’s finest.”
Established in 1999, the Australian Grand Dairy Awards are Australia’s most prestigious national dairy awards and the highest accolade for Australian dairy producers.
View the full list of 2018 Australian Grand Dairy Awards Champions and Grand Champions.
About the Australian Grand Dairy Awards
The Australian Grand Dairy Awards recognise and reward excellence and quality in Australian dairy produce, paying tribute to the achievements of the highly-skilled specialists who develop and make these products. Created in 1999, the Australian Grand Dairy Awards are Australia’s most prestigious national dairy awards and the highest accolade for Australian dairy producers. Visit http://www.legendairy.com.au/dairyawards for more information.
Dairy Australia’s trade team has been busy in 2017, promoting Australian dairy all around Asia and the Middle East. The team held seminars, cooking demonstrations, alumni dinners and workshops in Australia’s major export markets, building on existing and forming new relationships. Another three scholarship programs were held in Australia in 2017, with a total of 54 participants from Greater China, Japan, South Korea and South East Asia.
Dairy Australia Scholarship – South East Asia program (February 2017)
Running for the third time, the South East Asia scholarship program attracted 16 dairy professionals from Malaysia, Singapore, the Philippines, Vietnam, Myanmar, Indonesia as well as South Korea to visit Australia for the two week program. Participants visited farms and factories all around Victoria, learning about Australian dairy, with a focus on food safety.
Taste Australia event in Shanghai (March 2017)
On March 29 in Shanghai Dairy Australia, together with Meat and Livestock Australia, Wine Australia and Horticulture Innovation Australia hosted more than 120 media journalists, key opinion leaders and special guests at the inaugural Taste Australia event - the first time such an event has been jointly developed and staged by Australian agricultural Industry organizations working collaboratively. The event introduced media, key influencers and tastemakers to the possibilities of Australian food and drinks and the unique benefits they come with. Visitors experienced why Australian food and wine is sought after on the world stage, with the country’s diverse climate, multicultural background and global-standard production quality and safety as particular points of note. The afternoon event included special guest speakers and a cooking demonstration from Australian chef Tim Hollands, before guests experienced Australian food and wine first-hand at the tasting stations.
Middle East in-market program (March 2017)
Dairy Australia visited four markets of Iran, UAE, Saudi Arabia and Kuwait in the Middle East as part of the AU MENA Program organised by Austrade in the Middle East region. Apart from the Austrade program including networking receptions featuring dairy products and cooking demonstration, Dairy Australia also held two industry seminars in Dubai and Riyadh with the assistance of Australian chef Tim Hollands. A joint cooking demonstration represented by Dairy Australia and MLA was staged at one of the major food festivals in Kuwait, the first of its kind in the region.
Japan in-market program (April 2017)
Dairy Australia visited Japan (Kansai and Tokyo) to deliver industry seminars and undertake individual meetings with key customers and Japanese trading houses. The seminars provided an update to the market on the current situation and outlook for Australian dairy. The individual meetings were a timely opportunity to discuss dairy industry issues with key customers including Rokko Butter, Lacto Japan, Morinaga, Itochu, Mitsubishi, Meiji, SnowBrand and Nosawa.
Hong Kong and Taiwan in-market program (April 2017)
Dairy Australia visited Hong Kong and Taipei to conduct dairy seminars and industry meetings in the two markets. Two industry dairy seminars were held to update the local industry and customers about the situation and outlook of the Australian dairy industry and world dairy markets. Two cooking workshops were also held at Maxim's (Hong Kong's largest food service company) in Hong Kong and a culinary school in Taipei to promote the usage of dairy in food service and bakery.
South East Asia in-market program (June 2017)
In June 2017 Dairy Australia visited three key South East Asian markets – Singapore, Malaysia and Thailand. In each market industry seminars were held at which dairy customers were updated on Australian dairy industry capability. Dairy Australia also visited culinary schools in Singapore and Thailand to provide presentations and demonstrations of Australian dairy capability and product sampling. In Malaysia we held a dairy workshop for the Malaysian Chefs Association, and in Thailand we joined with Austrade to host an interactive Australian food and wine event for key opinion leaders including chefs and media. Alumni dinners were held in each market where we enjoyed catching up with participants from previous South East Asia Dairy Scholarship programs.
Dairy Australia Scholarship – Greater China program (July 2017)
The Greater China Scholarship was held in Victoria, with 18 delegates from China, Hong Kong and Taiwan participating in the two week training program. The program included industry and technical presentations, cheese making activities and visits to eight processing factories, three dairy farms and one product testing company. The delegates found the program very informative and useful to gain a better understanding of the Australian dairy industry and products, and they were able to build direct relationships with the Australian exporters and counterparts from other markets.
China in-market program (August 2017)
Dairy Australia attended the China Dairy Industry Association (CDIA) annual meeting and Dairy Technology and Equipment exhibition which were held in Hohhot, China. Again this year the Australian Ambassador to China attended the VIP Dinner and spoke at the opening of the CDIA conference. This is a demonstration of the close relationship between the Australian industry and government representation in China - Australia's largest dairy export market. A Dairy Australia Scholarship Alumni dinner was also held in Hohhot, with representatives from the local (Inner Mongolia) manufacturing industry, as well as visitors from elsewhere in China attending.
South East Asia in-market program (September 2017)
In September, Dairy Australia visited the South East Asia markets of the Philippines (Manila), Vietnam (Hanoi, Ho Chi Minh City) and Indonesia (Jakarta). In each city local dairy industry representatives were invited to industry seminars, where we shared updated information about the current status of the Australian dairy industry, with focus on milk production levels and pending changes in the structure of the milk processing sector. We also demonstrated the ease with which high quality Australian dairy products can be used in a range of quick innovative menus, by holding cooking presentations at both the seminars and culinary schools. More than 1000 trainee chefs were able to learn about Australian dairy products and be inspired to use them as they forge careers in the hospitality industry. We were pleased to meet with old friends, hosting SEA Scholarship alumni dinners in each country. We also took the opportunity to meet with candidates for the next SEA Scholarship program which will be held in February 2018.
Dairy Australia Scholarship – Japan program (September 2017)
In September, Dairy Australia celebrated the 20th anniversary of the Japan scholarship. 20 participants visited Australia for the two week program which builds on the strong relationship between the Japanese and the Australian dairy industry. Japan is Australia’s 2nd biggest export market, and the scholarship’s aim is to continue the confidence the Japanese market has in Australian dairy.
China in-market program (October 2017)
Dairy Australia visited China to hold a dairy seminar and an alumni seminar in Shanxi Province, with a cooking demonstration featuring a range of Australian dairy products. During the visit, Dairy Australia also attended Wine Australia’s China Awards event in Shanghai with the support of staging a cheese tasting session at the Wine Fair, which was attended by nearly 500 people representing trading, food service and retail sectors as well as local media.
Japan in-market program (November 2017)
In November 2017 the annual Kangaroo Kai seminar and reception was held in Tokyo, Japan – attended by over 200 senior representatives of the Japanese dairy and food manufacturing sectors. Also in attendance were representatives of Australian dairy companies and officials from the Australian Embassy in Tokyo, including Deputy Head of Mission Clare Walsh who spoke on behalf of the Australian Government at the reception following the seminar. It was very pleasing to note that several Alumni of the Japan Dairy Scholarship were in attendance. During the seminar the participants were briefed on the current situation and outlook for Australian dairy by Dairy Australia Chair Geoff Akers. They also heard about farming issues from Deputy Chair Jeff Odgers, the World Market from Dairy Australia’s Norman Repacholi and were updated on trade policy issues by Peter Myers.
Signs of downward pressure are beginning to emerge in dairy commodity markets. Butter prices – until recently at record highs – have fallen sharply in European markets over the past month. Skim milk powder (SMP) prices remain near 10 year lows, and conflicting signals from the European Commission relating to its 380,000 tonne stockpile have sent jitters through the market. Acceptance of bids at well below market prices small parcels of product, and uncertainty about the commencement or duration of fixed price buying in the new season (from March) are raising fears that the price floor may not be sustained, with potential flow on effects for other product prices. The underlying concern however, is that likely growth in milk production by major exporters will not necessarily matched by increases in demand – at least in the short term.
Thus far, the global dairy market has benefited from slow growth in milk production across a number of key exporters. In particular, European production remained below expectations due to sub-optimal weather through the northern spring and summer. With incentives to slow milk production expiring and the weather improving, production has seen a boost (even in the Netherlands, where some had tipped a sharp decline). New Zealand remains constrained by wet weather, but with attractive farmgate price forecasts, an acceleration in output for both of these major exporters is a likely reality in 2018. In addition, the US – where production never really slowed – is once again eyeing international markets as their solution to a growing domestic surplus.
The rain-induced slowdown in New Zealand’s milk production hasn’t been enough to stop whole milk powder (WMP) prices falling in October. Chinese buyers are the primary source of demand, and NZ sellers seem comfortable with sales booked to date. The major unknown remains the timeframe for a recovery in New Zealand’s milk intakes, with year-on-year growth suggested as early as mid-October. Until the data is finalised, buyers seem relaxed.
Cheese prices have remained steady, with European storage volumes dwindling as production trails growth in exports. Whilst European prices have eased, US indicators are currently the lowest, though processors are in no hurry to sell. Increased availability of US cheese is likely, and growing production has already driven whey prices further down
Dairy Australia’s forecast for Australia’s milk production in 2017/18 remains a growth range of between 2 and 3% on the 2016/17 total of 9.02 billion litres. This implies a forecast total of around 9.2 billion litres for 2017/18. Should October intakes show a similar trend to the slower-than-expected production through September (down 0.6%, and season to date growth of 1.0%) a review of this forecast is likely.
Australian dairy farmers hit by farm-gate price cuts and tough seasonal conditions in the last 12 months can be cautiously optimistic about improvements for the season ahead. Dairy Australia latest Situation and Outlook report found the difficult 2016/17 season experienced by some farmers in the southern export focused states caused cashflow management challenges that impacted on farmer confidence and milk production. However, Dairy Australia Senior Analyst John Droppert said the broader market provides some positivity with costs for major inputs contained and most farmers current milk price forecasts improved on 2016/17 levels. Confidence about the future of the dairy industry among farmers measured by the National Dairy Farmer Survey (NDFS) and conducted in February and March has dropped from 67% in 2016 to 53% in 2017. The survey also revealed profitability is at a three year low - 45% of farmers surveyed anticipated a profit in 2016/17. National milk production for the 2016/17 season is also expected to be down about 7.5% on the previous financial year to about 8.95 billion litres. The NDFS survey revealed a third of farmers expected to grow their herd size in the next 12 months and close to two thirds anticipated their production to increase in the next three years which signals a modest growth in milk volume to around nine billion litres for the season ahead. Input costs are a more immediate bright spot. Record international production, and strong harvests in Australia have kept grain prices contained. There has been little change to the hay market in the last few months with subdued demand, ample supply and low prices. Most irrigation systems are expected to receive a high seasonal determination in 2017/18, and temporary water prices ended the 2016/17 season well below the $100/ML mark. Internationally, improved margins have halted the fall in milk production in most exporting regions and overall demand for exports continues to grow with the volume of dairy products traded over the twelve months to February boosted by 3.8%. A recovery in demand from Greater China accounts for around 30% of this, while south east Asia has also seen growth. Tonnages exported to the Middle East and North Africa, as well as Japan have eased slightly.
The Australian dairy industry has seen the beginnings of a recovery in recent months, as some of the drivers of farm profitability return to more favourable settings. Costs of major inputs continue to fall, with big grain and hay harvests bolstering supplies – although quality is likely to be an issue with conserved fodder. The global dairy supply and demand balance is better than it has been for some time, and prices for most products are back above five year average levels.
Milk price step-ups have also helped improve the cash flow situation for many southern farmers, but production margins remain tight or negative, and many face a significant task rebuilding their equity position after the past 12 months. Trust and relationships along the supply chain are also in need of further repair, and a number of external enquiries and industry-led initiatives launched in the wake of the late 2015- 16 season step-downs, are ongoing. Domestic, fresh milk-focused regions are facing emerging challenges, with milk price reductions flagged for a number of producers as protracted negotiations continue.